KEY POINTS:
While Puma had long played second fiddle to adidas in the sporting world, plans for a stock market listing and a high profile sponsorship deal with rising tennis star Boris Becker gave the company new hope in the 1980s. But in this, the fourth of the Business Herald's five-extract series from Barbara Smit's Pitch Invasion, Puma is headed for a fall.
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Armin Dassler beamed as he shook the bankers' hands. As head of Puma since Rudolf's death he had suffered triumphs and setbacks, but this was undeniably his finest hour.
That morning, July 25, 1986, Puma was to be listed on the Frankfurt stock exchange. While adidas was still a private company, its smaller rival entered the select group of German firms that featured on the financial pages every day.
Puma's shares shot up immediately. In the eyes of the German public, they were closely associated with a freckle-faced tennis player who had burst on to the scene the previous year. In July 1985 the 17-year-old Boris Becker stunned the tennis world by winning Wimbledon - the Puma logo clearly visible on his shoes as he dived around the court.
Puma had been tipped off about Boris Becker by a Romanian former player, Ion Tiriac. After a rejection by adidas, Tiriac convinced Puma to fork out DM300,000 in 1984 for a shoe contract with Boris Becker, then completely unknown.
It paid off in spades as Boris went on to become "Boom Boom" Becker, a hugely popular and extremely successful player. The hype reached its peak in July 1986, just days before the Puma float, when Becker won his second Wimbledon title in a row, beating the three-striped Ivan Lendl in straight sets.
The company claimed that the Becker effect had nearly tripled the sales of its tennis rackets. Puma was so closely associated with the player that the company's public offering was dubbed the "Becker float".
The deal crowned a triumphant run for Puma. Since Armin Dassler had taken over from his father in 1974, the company's turnover had shot up to nearly DM820 million in 1985. When he took control, Armin began to issue a throng of licences and distribution deals that beefed up the brand's global sales, and strove to cultivate its position as a snappy underdog.
But Armin's impulsive behaviour sometimes landed Puma in dire straits. One of his most damaging outbursts was the sudden dismissal of Beconta, Puma's long-time and exclusive distributor for the whole of the United States, in June 1979.
The decades-old relationship worked reasonably well until Armin began to feel that the company was holding him back because it didn't have the resources to push Puma all across the country. Instead of working out a compromise or organising a smooth transition, Armin Dassler fired Beconta in a huff.
"There was no need for the mayhem which my brother caused by breaking up with them from one day to the next," said Gerd Dassler. "I don't know why Armin flew off the handle this time. From then on, the United States was a mess for Puma."
Over the next few years, the chosen partners struggled to convince Puma that their hard shoes were no longer adequate for the American market. Just like their competitors at adidas, they failed to get the message across and muddled along with "shoes that felt like bricks". But the Puma brand suffered an even more damaging blow when Armin Dassler encouraged new distributor Dick Kazmaier to sign a massive deal with an American discounter.
By the mid-80s Puma began to suffer the consequences. Foot Locker, the most influential sports retailer in the United States, decided to scrap its business with Puma. If the brand was sold at K-Mart, they didn't want it on their shelves.
Armin Dassler then turned to his eldest son. Frank, 29, was still a law student. A bright and hard-working young man, he turned up at Puma before his lessons in the mornings, and set up a research department called the Running Studio, which looked into the biomechanical aspects of running. But his knowledge of the business remained limited and his managerial experience was non-existent.
For all his ardour, Frank Dassler was unable to stem the US collapse. In February 1985, he warned the Puma board that American sales were crashing. But the full extent of the troubles became apparent towards October 1986, just months after the Puma float. By then, the value of the Puma shares had soared from an issue price of DM30 to more than DM400. As news of the company's US woes began to seep out, the shares fell back just as sharply. The loss suffered by the American operation, which would reach around $27 million, would plunge the entire company into the red.
To make matters worse, Boris Becker became a millstone round Puma's neck. Once hailed as a German role model, he was suddenly perceived as an arrogant brat. His performance on the court waned as fast as his tabloid infamy grew. He triggered nationwide outrage when he moved to Monte Carlo in an apparent attempt to avoid German taxes and to duck out of obligatory military service.
But Puma was stuck with a huge contract which Tiriac had negotiated in 1986, shortly after Becker's second Wimbledon victory. Armin Dassler had signed a delirious deal to outfit Becker from shirt to racket: The player would pocket at least $5 million for each of the next five years, as well as a hefty commission on the sales of Puma products in the Boris Becker range.
It would have taken staggering sales to make the deal worthwhile for Puma at the best of times. In the circumstances it was a permanent embarrassment and a growing liability.
As Puma's reputation was dragged through the mud, Deutsche Bank seized control. Jorg Dassler, Armin's second son, distinctly recalled the evening in September 1987 when his father crashed on the couch in a state of utter despair. He had just returned from a meeting with bankers at the Deutsche Bank. They said that they were preparing to remove him from the company. "You have lost your business," Armin was apparently told.
This was a devastating blow for Armin, who had dedicated his life to Puma. He had weathered the humiliations inflicted by his cousin and worked tirelessly to make sure that Puma could continue to compete. It was hard for him to comprehend how anonymous bankers could take this family heirloom away from him, and it was a blow from which he never fully recovered.
